Buying Property at Foreclosure Auction

[Maurice Morgan]

Hi All,

For those having experience with purchasing real estate at auction, is the title conveyed to the winning bidder clear of all interest on the property?

I am thinking about using this method to acquire property, but I am unclear on what you actually get.

Thanks for your wisdom.

-Maurice

[Steve Babiak]

Originally posted by @Wayne Brooks:

Banks don't bid more than they're owed, there's no possible benefit.  Urban/ignorant BS.

In general, this holds but it is not 100% true. Banks are known to not pay property taxes during the foreclosure process, but at auction they will offer a bid that includes the debt owed plus the delinquent property taxes - otherwise when the taxes are paid from the auction proceeds the bank could end up short of what was owed. And that is under the assumption that the bank expects a third party bid. 

Now, I also excluded bids from a junior lien holder when a senior lien is foreclosing; those junior bids could be for more than the junior is owed since the senior lien bid is added in. I wrote "could" because the junior lien holder only has to out-bid other bidders, not necessarily the full debt owed.